I believe that I can resolve the discussion of recent postings regarding whether CC (capitalized cost) matters more than RV (residual value).

The answer is that everyone is right. This is because the only way to compare two leases is by calculating the TCO (total cost of ownership) across the lifetime of both leases, not by looking at the CC or RV in isolation.

Let's compare imaginary Lease A against imaginary Lease B.

LeftieBiker is correct: if Lease A has a lower CC than Lease B, then Lease A can also have a lower RV, so that the total cost of ownership is the same for both leases.

DucRider is also correct: if Lease A has a higher CC than Lease B, then lease A can also have a higher RV, so that the total cost of ownership is the same for both leases.

If you keep everything else equal, then lowering the CC lowers the TCO.

If you keep everything else equal, then raising the RV lowers the TCO.

But the leasing companies do not keep everything equal. And so if you modify both the CC and RV at the same time, then all bets are off, and your TCO's can go in any direction.

This lack of predictability is true not just for CC and RV, but for all the parameters of a lease. The MSRP, rebates, capitalized cost reduction, doc fee, license fee, disposition fee, acquisition fee, and all the other fees and charges, these are all just mathematical fictions created by the leasing company. If you focus on reducing just one of them, then the leasing company can simply raise another one of them, and the total cost of the lease hasn't changed at all -- or has even increased -- even though it looks like it's gone down.

In other words, although everyone is right in describing the importance of monthly payments or rebates or capitalized cost reduction or residual value, none of these parameters matters in isolation, because it can be easily cancelled out or unbalanced by another parameter.

The only way to tell whether a lease is a good deal -- equivalently, the only way to compare one lease with another lease, apples-to-apples -- is to calculate the total cost of ownership, including all fees.

Since everyone was correct in their earlier postings, I suggest now returning back to the original goal of sharing real-world lease information.

Also, I hope that posters on this group will do their best to provide sufficient information for calculating TCO (total cost of ownership). My own earlier post steps through a way to calculate TCO. This kind of effort is important because only with a TCO is it possible to accurately compare one lease with another.

Edited: per DucRider's input.

Last edited by bluebolt on Wed Sep 13, 2017 1:50 am, edited 1 time in total.

LeftieBiker wrote:The inflated residual is generally agreed to be more than the car is actually worth, so it isn't a "savings" in any rational sense, because GMAC has also pocketed $5k in return for doing it.

You continue to assert that GM is "pocketing" $5k of the tax credit. DucRider, I, and others have given you example numbers which refute this claim. If we are missing something, let's start here.

We have defended our case with reason and numbers. Now it is time for you to do the same. Please give us an example lease scenario in which GM "pockets" the $5k.

Thanks, but that's not what I was asking for. Your numbers support my stance, not Leftie's. I want to see the scenario in which GM pockets $5k in a lease/return scenario. Because his claim is that if you buy out the lease, they get the $5k twice.

DNAinaGoodWay wrote:Are they hoping I won't notice? Or that a Bolt will retain value somehow?Who knows?

I would guy a little of both, and maybe a third option as well.

There may be some who simply buy out the lease without question. In that case, GM does get to keep $5k of the tax credit.

Looking at the Volt (with which GM did the same thing for leases), it may have contributed to less depreciation on used cars. Or maybe not, I don't claim to know.

The third thing that comes to mind is this gets people into a pattern of leasing. GM would rather you lease a brand new car in 3 years than simply buy out the one you've been renting. It seems that many people in the EV market have fallen into this pattern. Always hopeful that the latest-and-greatest will be much better 3 years down the road (and typically it is, right now).

Well, I wasn't trying to support Leftie. I have no idea where he gets that two time penalty thing. I just wanted to clearly show that the only way GM gets $5k extra is if you give it to them at buyout, and not if you return it. So, yes, you're correct.

The only way that buyout becomes worth it if is something prevents ICEVs from running, like new laws or a catastrophic event in the fuel supply. If even 2011 Leafs become $25,000 used cars, that extra $5k might make sense.